1 Neil's Halls operates two bingo halls, one in Clarkson and one in Caledon. Selected data on the two locations follow: 5 4 Clarkson Caledon $150,000 $1,000,000 $30,000 $90,000 $150,000 $500,000 Sales Net operating income Average operating assets 5 6 7 8 9 Required: 1. Compute the margin, turnover and return on investment (ROI) for each location. (3 marks) 10 11 Clarkson Caledon 12 13 14 Margin Turnover Return on investment 15 16 17 2 18 Assume that the minimum required return is 17%. Calculate the residual income for each location. (4 marks) Clarkson Caledon 19 20 21 22 Residual income 23 CUCK HERE TO SAVE Neil's Halls is planning on opening a second location in Clarkson. Selected data for the new location follows: MB. 25 26 $425,000 80% $61,000 $150,000 Projected sales Variable expenses Fixed expenses Operating assets 23 28 29 30 31 The manager of the Clarkson location has been asked to operate this location. If the manager is evaluated using ROI, will he agree to operate this location? Why or why not? Show all supporting calculations (7 marks) 32 33 34 35 36 37 38 39 10 11 Decision 12 Reason 3 4 10